IKEA invests €1.5bn to phase out fossil fuels in existing properties

IKEA’s largest retailer Ingka Group has announced a €1.5 billion investment that will be used to retrofit existing facilities with renewable heating and cooling, phasing out its direct use of fossil fuels.

Heating and cooling are currently the largest drivers of emission within Ingka’s own operations, and the investment is meant to help it advance towards its goal of reducing this footprint by 85% by 2030.

In its latest sustainability report, Ingka Group said it was not on track to meet its target of using renewable heating and cooling systems in 100% of buildings by 2030, despite having retrofitted six sites with renewable-powered heat pumps.

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“Phasing out fossil fuels by switching to heat pumps requires significant investment and can be a complex and lengthy process,” the firm said, adding that it had developed a roadmap to complete the transition at 150 additional units by 2030 – a roadmap now supported by a €1.5 billion investment.

IKEA CSO: ‘This investment will pay off’

“The electrification of the heating and cooling sectors must be driven by renewable and efficient technologies. That’s why I’m thrilled to share that Ingka Group will invest a total of €1.5 billion to accelerate our transformation towards renewable energy in retail operations,” said IKEA Chief Sustainability Officer Karen Pflug. “This investment will enable us to advance our decarbonisation plans further and faster – and we know it will pay off in the long term!”

At the same time, she called on governments to rapidly scale up renewable energy while phasing out fossil fuel and connected subsidies, invest in the grid infrastructure necessary for renewable energy and electrification, set stronger energy efficiency regulations across sectors, simplify renewable project permitting and incentivise the retrofitting of existing buildings.

CEO sees investment as ‘a win-win’

“Ending our reliance on fossil fuels is essential to tackling the climate crisis and halving global emissions by 2030. The future of energy must be renewable, and this additional investment will enable us to reduce our carbon emissions, increase efficiency and lower costs in the long term. It’s also good for business - a win-win,” added Jesper Brodin, CEO of Ingka Group.

The new funds complement the €7.5 billion already committed to offsite renewable energy production and technologies.